Dairy is de­serted by cash-strapped Ki­wis

The price of milk has be­come too rich for many house­holds’ taste with dairy gi­ant Fon­terra re­port­ing a ‘‘dra­matic’’ fall in sales. The price of a 2-litre bot­tle of milk has jumped 15c to $4.30 to $4.50 af­ter two price rises in the past five months.

The price hike is the re­sult of strong global dairy com­mod­ity prices.

Fon­terra Brands man­ag­ing di­rec­tor Peter McClure, an in­dus­try vet­eran, said it was the high­est milk price he could re­mem­ber and had led to a fall of about 1 per cent in milk sales in the past three months.

This was more sig­nif­i­cant than it sounded given milk sales had been grow­ing solidly at 2 to 3 per cent for five years, boosted by Ki­wis’ love af­fair with cof­fee, he said.

Mr McClure had seen shop­pers shy away from buy­ing milk dur­ing pre­vi­ous price spikes but said sales had re­cov­ered quickly in the past. This time the de­cline is con­tin­u­ing. Mr McClure could not rule out an­other round of price rises in March af­ter Fon­terra di­rec­tors last month raised their milk pay­out fore­cast for the sea­son to farm­ers from $6.60/kg milk­solids to $6.90 on the back of strong in­ter­na­tional prices.

Sales of 1kg fam­ily blocks of cheese had also dropped off af­ter reach­ing $10 with shop­pers reach­ing for smaller blocks, Mr McClure said.

But­ter had soared by more than 50 per cent to around $5 for 500gms but sales vol­umes were hold­ing steady thanks to the ‘‘in­cred­i­ble im­pact’’ of house­hold­ers’ ap­petite for tele­vi­sion cook­ing and celebrity chef shows, he said.

Su­per­mar­ket house-branded dairy prod­ucts are usu­ally slightly cheaper than other Fon­terra brands al­though they are made from the same milk.

Fon­terra Brands and Good­man Fielder are the big cheeses of the New Zealand do­mes­tic dairy prod­uct man­u­fac­tur­ing mar­ket.

But Good­man Fielder buys its milk from Fon­terra, which con­trols around 89 per cent of the coun­try’s raw milk sup­ply, so is sub­ject to the same price rises as its com­peti­tor Fon­terra Brands.

Stuff.co.nz

Photo: FILE

DE­MAND DROPS: Milk sales have fallen as the price of milk con­tin­ues to rise.